Jottings By An Employer's Lawyer

Wednesday, February 15, 2006

When 3 Wins Equals A Loss


When John Eastman felt he was terminated because of his complaints regarding his company's practices with respect to government contracts, he brought a common law public policy claim in Ohio state court. Since he based the public policy on two federal statutes, the defendant did what ever self respecting defendant does (or at least seriously considers) -- removed, here on the basis of federal question.

Preferring to have his case heard in state court, Eastman moved to remand, which the Court denied. Win #1. One year later, Eastman asked the Court to reconsider whether it had jurisdiction. It declined. Win #2. With jurisdiction now firmly established, the employer's motion for summary judgment was granted. Win #3.

On appeal, the first question -- as it always is -- was there federal court jurisdiction? Here the Court noted that this is not like the majority of cases based on federal question - where the cause of action clearly arises under a federal law. Instead the employer argued for what the Court called the"less traveled"way to federal court -- "where state law claims implicate federal issues." The Court now had to decide the question it had previously left unanswered - "whether a wrongful discharge claim based on federal public policies invokes federal jurisdiction."

Two factors seemed to tip the balance in favor of no jurisdiction - Congress had not created a cause of action for violation of the statutes on which the claim was based and more importantly, a decision would be "disruptive of the sound division of labor between state and federal courts envisioned by Congress." The Court explained its rationale for the latter argument:
[O]ur perception is that the bulk of the judicial business in the United States in this area [employment litigation] is conducted by the state courts. This balance would be upset drastically if state public policy claims could be converted into federal actions by the simple expedient of referencing federal law as the source of that public policy. We believe such a dramatic shift would distort the division of judicial labor assumed by Congress under section 1331.
Eastman v. Marine Mechanical Corp. (6th Cir. 2/15/06) [pdf]. I would be interested in seeing statistics on whether there is more employment litigation in state than federal court, but the Court offered nothing other than its "perception."

Since Texas has such a limited public policy exception, it wouldn't unleash any floodgate of litigation here, but other states are more liberal in the use of public policy as an exception to the at will rule.

Back to where we started -- notwithstanding 3 legal wins -- the employer is now back to where it started, in state court with the disposition on the merits still to come. It's always a bummer to lose on appeal, but this one has to sting even more than usual. But somewhere in the great hereafter, Professor Bernie Ward, my federal courts' teacher is smiling -- yet another court has validated his mantra that federal courts are "courts of limited jurisdiction."


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